Protecting Satellite TV Subscribers, DISH Network and DIRECTV File Suit in Florida Challenging Constitutionality of Satellite Tax
Suit Claims Discrimination Against Satellite TV Subscribers
While Local Cable is Given Favorable Tax Treatment
ENGLEWOOD, Colo., and EL SEGUNDO, Calif., May 5, 2005 - Defending the rights of hundreds of thousands of satellite TV subscribers in Florida, DIRECTV Inc., and EchoStar Communications Corporation and its DISH Network, the leading providers of satellite TV service in the nation, have filed a lawsuit in the Florida Circuit Court for Leon County challenging the constitutionality of provisions in Florida's communications services tax law that discriminate against satellite TV services in favor of competing services sold by cable.Suit Claims Discrimination Against Satellite TV Subscribers
While Local Cable is Given Favorable Tax Treatment
"Satellite TV provides an affordable alternative to rising cable rates in states where the two services compete on a level playing field," said David Rayner, chief financial officer for EchoStar. "Florida residents have less robust competition in the pay-TV marketplace as a result of the cable-sponsored special tax placed on satellite service. We will continue to oppose unconstitutional and anti-consumer laws that put satellite at a competitive disadvantage to cable."
Under Florida's communications services tax law, satellite customers are forced to shoulder a substantially higher tax burden - 10.8 percent on retail sales - than their cable counterparts, who pay only 6.8 percent.
"This lawsuit is about protecting our customers - many of whom dropped cable for satellite television - throughout the state of Florida," said Mike Palkovic, chief financial officer, DIRECTV, Inc. "Why should they be penalized for choosing the only viable choice to cable? Imposing a statewide tax on satellite TV companies discriminates against interstate commerce in violation of the Commerce Clause of the U.S. Constitution. Beyond the legal implications, this satellite-only tax eliminates the level playing field and discourages fair, market-driven competition between satellite and cable TV providers operating in the state."
Unlike cable companies that must obtain franchises from local governments to use local, tax-supported infrastructure to transmit their programming, satellite TV companies receive their signals from satellites in space and thus don't need to dig up city streets and use public rights-of-way.
Under the Florida law, cable operators' franchise fees -- a cost of doing business -- are used to offset the cable companies' overall tax obligation. Satellite companies in contrast, pay the full amount of the tax, without any offsets. The result is added expense for satellite customers, compared with cable customers
While the majority of states do not discriminate between the taxation of satellite and cable television services, a handful of states have attempted to pass satellite tax legislation - usually with little success. The satellite television industry has aggressively pursued legal action against states imposing discriminatory taxes. DISH Network and DIRECTV encourage their customers and the hundreds of retailers in the state to contact the state agencies and legislators to voice their disapproval. Satellite TV subscribers across the country can visit www.stopsatellitetax.com for more information on how to stop unfair satellite TV taxes in their state.
About DIRECTV, Inc.
DIRECTV is the nation's leading and fastest-growing digital television service provider with 14.4 million customers. DIRECTV, the Cyclone Design logo are registered trademarks of DIRECTV, Inc. DIRECTV (NYSE: DTV), a world-leading provider of digital multichannel television entertainment services, is approximately 34 percent owned by News Corporation Ltd.
About EchoStar
EchoStar Communications Corporation serves more than 11.2 million satellite TV customers through its DISH Network(TM), the fastest growing U.S. provider of advanced digital television services in the last five years. DISH Network offers hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service. DISH Network ranks No. 1 in Customer Satisfaction among Cable/Satellite TV Subscribers by J.D. Power and Associates. Visit EchoStar's DISH Network at www.dishnetwork.com or call 1-800-333-DISH (3474).
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Contact: Bob Marsocci Steve Caulk
DIRECTV, Inc. EchoStar Communications Corp.
(310) 726-4656 (303) 723-2010
Protecting Satellite TV Subscribers, DIRECTV and DISH Network File Suit in Kentucky Challenging Constitutionality of New Satellite Tax
Suit Claims Discrimination Against Satellite TV Subscribers
While Local Cable Companies Given Favorable Tax TreatmentSuit Claims Discrimination Against Satellite TV Subscribers
ENGLEWOOD, Colo., and EL SEGUNDO, Calif., May 5, 2005 - Defending the rights of hundreds of thousands of satellite TV subscribers in Kentucky, DIRECTV Inc., and EchoStar Communications Corporation and its DISH Network, the leading providers of satellite TV service in the nation, have filed suit in the U.S District Court for the Eastern District of Kentucky, challenging the constitutionality of provisions of a tax law enacted last month that would impose discriminatory taxes against satellite TV services in favor of competing services sold by cable television companies.
"This lawsuit is about protecting our customers - many of whom dropped cable for satellite television - throughout the state of Kentucky," said Mike Palkovic, chief financial officer, DIRECTV, Inc. "Why should they be penalized for choosing the only viable choice to cable? Imposing a statewide tax on satellite TV companies discriminates against interstate commerce in violation of the Commerce Clause of the U.S. Constitution. Beyond the legal implications, this new law is simply unfair to Kentucky consumers who subscribe to satellite television, since they will bear the brunt of this new tax."
The new law superficially imposes the same rate of excise and gross revenue taxes on satellite companies as it does on cable; but in reality, satellite companies will be taxed at a substantially higher rate than their cable counterparts. Cable companies are using their local franchise fees - a simple cost of doing business that gives them the right to tear up city streets and use utility poles -- to offset the cable companies' overall tax obligation. Satellite companies, in contrast, pay the full amount of the tax, without any offsets. The result is added expense for satellite customers, compared with cable customers.
"Satellite TV provides an affordable alternative to rising cable rates in states where the two services compete on a level playing field," said David Rayner, chief financial officer for EchoStar. "Kentucky residents will have less robust competition in the pay-TV marketplace as a result of the cable-sponsored special tax recently placed on satellite service. We will continue to oppose unconstitutional and anti-consumer laws that put satellite at a competitive disadvantage to cable."
While the majority of states do not discriminate between the taxation of satellite and cable television services, a handful of states have attempted to pass satellite tax legislation - usually with little success. The satellite television industry has aggressively pursued legal action against states imposing discriminatory taxes. DISH Network and DIRECTV encourage their customers and the hundreds of retailers in the state to contact the state agencies and legislators to voice their disapproval. Satellite TV subscribers across the country can visit www.stopsatellitetax.com for more information on how to stop unfair satellite TV taxes in their state.
About DIRECTV, Inc.
DIRECTV is the nation's leading and fastest-growing digital television service provider with 14.4 million customers. DIRECTV and the Cyclone Design are registered trademarks of DIRECTV, Inc. DIRECTV (NYSE: DTV), a world-leading provider of digital multichannel television entertainment services, is approximately 34 percent owned by News Corporation Ltd.
About EchoStar
EchoStar Communications Corporation serves more than 11.2 million satellite TV customers through its DISH Network(TM), the fastest growing U.S. provider of advanced digital television services in the last five years. DISH Network offers hundreds of video and audio channels, Interactive TV, HDTV, sports and international programming, together with professional installation and 24-hour customer service. DISH Network ranks No. 1 in Customer Satisfaction among Cable/Satellite TV Subscribers by J.D. Power and Associates. Visit EchoStar's DISH Network at www.dishnetwork.com or call 1-800-333-DISH (3474).
